Use the following financial information to find the entry you would make on an income statement for COST OF GOODS SOLD for the year ended December 31, 2011: Gross Sales, $180,000; Sales Returns and Allowances, $9,000; Sales Discounts, $6,300; Merchandise Inventory, January 1, 2011, $60,900; Merchandise Inventory, December 31, 2011, $66,700; Net Purchases, $58,300; Freight In, $600; Salaries, $84,700; Rent, $22,000; Utilities, $1,125; Insurance, $2,025; and Income Tax, $17,750.
A) $45,985
B) $30,800
C) $53,100
D) $65,754

Question

Quizplus · Accepted Answer

Cost of Goods Sold (COGS) is calculated as: Beginning Inventory + Net Purchases + Freight In - Ending Inventory. Thus, COGS = $60,900 + $58,300 + $600 - $66,700 = $53,100.

Use the Following Financial Information to Find the Entry You